The February Nonfarm Payroll report showed that the U.S. lost 36,000 jobs compared to recent estimates of 50,000-75,000 job losses. Most of the job losses were in construction and most were due to the three snowstorms that blanketed the northeast. The unemployment rate was unchanged at 9.7% and most analysts expected it to rise by several tenths. Household employment increased for the second month.

January's job losses were revised slightly higher to -26,000 from -20,000. The December job losses were revised lower to 109,000 from 150,000.

Construction posted the biggest losses of 64,000 jobs and weather was the primary reason. Temporary agencies added 48,000 jobs inline with the prior two months. Temporary hiring is a good leading indicator of overall hiring.

Household employment increased for the second month with the addition of 308,000 jobs. The number of people joining the labor force also increased slightly. The labor force participation rate rose to 64.8% but that is still below the pre recession level of 66%. The percentage of industries hiring rose to 48% and the highest level since 2008. Over 55% of manufacturing companies are either adding to payrolls of keeping employment level.

Without the weather related losses in manufacturing and government losses the economy would have added 46,000 jobs for the month. Census hiring was expected to have added significantly in February as they ramp up to 1.1 million workers in April but the campaign is getting off to a slow start and there was little hiring in February.

Nonfarm Payroll Chart

In the ongoing debt saga over Greece, German Chancellor Angela Merkel said Greece has not made any request for financial support and said Germany would not pay one cent even if asked. The Greek story should fade from the headlines over the coming week now that Greece has successfully sold $7.5 billion in bonds. The story is not over but at least the current chapter has come to a close.

Apple Computer (AAPL) rallied +8 after announcing the iPad will hit U.S. store shelves on April 3rd. Apple rallied to $219 and an all time high on the announcement. Apple said the device will initially be sold in the U.S. but expand to nine international markets by the end of April. There were worries that manufacturing the new device in quantity could be a bottleneck for sales but those worries have now eased. The 9.7-inch screen device is all new technology and the most awaited device since the iPhone release in 2007. Those who want to buy the G3 cellular version will still have to wait until late April. Beginning March 12th consumers will be able to preorder either version on Apple's website. Research firm iSupply is estimating the cost of materials in each device is $219.35 with a $10 assembly cost.

Coal companies rallied after a Chinese company agreed to pay BHP Billiton $200 per ton for coking coal in a three-month supply deal. The most recent anticipated price was $150 per ton and the spike in prices is a sign of the rapidly rising demand in China. Even with coal prices rising sharply China has become a black hole for coal consumption. The BHP deal will raise prices by other companies around the globe. Coal companies also rose on news that India's Essar Group was buying West Virginia based Trinity Coal for $600 million. Trinity operates 13 mines in WV and Kentucky. The deal includes 200 million tons of reserves with half of it metallurgical grade suitable for making steel. Patriot Coal (PCX) gained +9%, James River (JRCC) gained +7%, Massey Energy +5% and BHP added +3%.

Crude oil prices rallied almost to $82.07 and a two-month high. With jobs improving and winter coming to an end analysts expect gasoline demand to increase and overall demand for crude products to rise.

China helped to boost the markets this morning after the Chinese Premier said his country is on track for 8% growth in 2010 and the country will continue its stimulus program to ensure solid growth. China is expected to increase its demand for oil by 8-10% in the first half of 2010.

GM said it will begin notifying some of the 1,060 dealers marked for shutdown that their franchises will be restored after the congressionally mandated arbitration. GM had planned to close 1300 dealerships as part of its bankruptcy program in an effort to return to profitability. A source said "several hundred" of the dealerships will be invited to remain a GM dealer. The government owns 60% of GM after investing $65 billion in the company to keep it from failing.

The jobs report propelled the markets significantly higher on hopes the economy was really back on track. The S&P moved over the 1120 level which had been a barrier for the last three days and the chart clearly shows the breakaway from the 1115-1120 level. The next roadblock is 1150 and baring any new economic revelations of upgraded guidance from some major company that resistance is likely to be strong.

S&P Chart

I have been reporting for several weeks about the resistance battle on the NYSE Composite index and the 100-day average. Today's rally put that battle well in the past and the breakout over 7250 is now the focal point. If we can close over 7250 it would be another nail in the bear's coffin. The composite index is more than 2200 stocks listed on the NYSE from the smallest companies to the very large like XOM, GE and WMT. This is a snapshot of U.S. businesses across all sectors and sizes.

NYSE Composite Chart

Houston we have liftoff! The Russell 2000, the leading indicator for a bull market, is in full breakout mode. The last resistance at the 650 level is now history. Fund managers are buying in volume and reluctant shorts now have no excuse to remain short.

Russell 2000 Chart

The qualification on the bullish comments above is simply "We need to close at these levels." Just breaking out on short covering after the payroll report is not sufficient. We need to close at these levels. We have seen end of day selling for much of the last week and that trend needs to reverse to end of day buying where those still attempting to short the market are forced to cover rather than face the potential for a gap higher the following day. The markets are in breakout mode BUT the Russell is the only index that has actually moved to a new high for the year. There are several resistance potholes in our way but as long as the speed holds they should only be bumps and not major detours.

Jim Brown